Companies that have manufactured or imported chemical products in the U.S. in the past ten years (alone or formulated in products and mixtures) should plan now to comply with new rules requiring them to identify and report each of those substances to the U.S. Environmental Protection Agency (EPA) in the third and fourth quarter of 2017. The EPA will use this information to identify chemicals on the current Toxic Substances Control Act (TSCA) inventory of chemicals in commerce (the TSCA Inventory) that are no longer in active commercial use. Chemicals not reported as being made or imported during the look-back period will be designated "inactive" and it will be illegal thereafter to manufacture, import, process or use those chemicals in the U.S. until they are 'reactivated' by prior notice to EPA. EPA's proposed reporting rules were issued on January 13, 2017 and are open for public comment until March 14. Final rules are expected by June 22. This deadline is established by statute and is not expected to be affected by the Trump administration's January 30 executive order on reducing regulation.

This new, broadly applicable reporting obligation will affect many companies often exempt from other kinds of EPA reporting, including importing retailers. Reporting is required regardless of the size of the business, the amount of chemical manufactured or imported, or the industry sector of the reporting company. It also introduces a new product compliance obligation for companies. Currently before making or importing a product, companies must confirm that each chemical in it is listed on the TSCA Inventory or exempt. Under the new rules, they also will need to confirm that each listed chemical is designated "active."

Given the ten-year look-back period to be investigated, the interdisciplinary nature of necessary investigations, the potential for discovering past or ongoing chemical reporting violations, the potential consequences if a chemical is overlooked and the relatively short time to report, companies should plan and act now to timely meet these requirements in the fall of 2017. Most immediately, companies have the opportunity now to review the details of EPA's proposed reporting rules in light of their individual circumstances (e.g., nature and extent of current and historic operations, relative knowledge of supply chain details, nature of substances produced) and identify with their internal subject matter teams the practical difficulties they may have in reporting as EPA has proposed. Where warranted, companies should submit comments to EPA requesting changes to clarify ambiguities, avoid unintended consequences and otherwise make reporting less burdensome and more practical.

TSCA Inventory "Reset" and Schedule

Often referred to as a "reset" of the TSCA Inventory, this one-time retrospective reporting program is required by the June 2016 amendments to TSCA (the Lautenberg Amendments). These amendments direct EPA to prioritize and review the health and safety of all chemicals on the TSCA Inventory—currently more than 85,000. The TSCA reset will cull "inactive" chemicals from the TSCA Inventory and allow EPA to focus its oversight efforts on those chemicals actually in use. The new law requires EPA to have the rules implementing the "reset" in place by June 22, 2017, and requires companies to complete mandatory reporting within six months thereafter (i.e., no later than December 22, 2017).

Reporting Applicability

Subject to certain exemptions, each person who imported or manufactured a chemical substance in any amount at any time between June 21, 2006 to June 21, 2016 will be required to report that substance to EPA. The EPA has proposed giving chemical processors the option to report, including giving them an additional 180 days to submit their information. This allows processors to wait and see which substances manufactures and importers have reported, and to submit their own reports for chemicals important to their business that manufacturers or importers have overlooked, in order to be sure that those overlooked substances are designated "active" and remain available for use. As proposed, each individual corporation or legal entity with reportable chemicals would have to report separately on its own activities with a substance, even if affiliated or unaffiliated companies had already reported on that substance. Special procedures apply for toll manufacturing or co-importing circumstances.

Exempt Substances

Reporting generally is required for any substance produced in or imported into the U.S., but there are a number of important exemptions. Reporting is not required for pesticide products, food, drugs, cosmetics, medical devices and quantities of substances imported or manufactured solely for research and development. Also exempt are substances that have been incorporated into articles (items with a design important to their function), and substances made or imported only as impurities, or produced as byproducts and later disposed (and not used). Naturally occurring substances are exempt if they are substantially unprocessed (e.g., ores, raw agricultural products, crude oil). But oils, fats and gums extracted from agricultural products, and commercial biological products that otherwise occur naturally (yeasts, bacteria, enzymes), are not exempt unless they qualify for another exemption (e.g., as R&D materials, or as food or drug components). Also exempt from reporting are all substances reported to EPA in the 2012 or 2016 quadrennial chemical data reporting (CDR) events (generally individually regulated chemicals, and those made or imported in quantities greater than 25,000 lbs./year). While this provides relief from reporting, it does not significantly limit the scope of necessary investigations. It also does not apply to any CDR substance whose identity was claimed as confidential.

Covered Substances

Almost all other materials and substances are subject to mandatory reporting. This includes typical bulk chemicals and chemical mixtures, but also includes other kinds of bulk items and materials that are not articles, such as metal ingots. Chemicals contained in imported commercial products in the form of liquids, gels or particles—such as imported bottles of cleaning compounds, or ink contained in imported pens—are reportable. Where the material is a solid or liquid mixture, the mixture itself is exempt, but each of the individual components of the mixture must be identified and reported. Manufacturing covers the intentional production of chemicals, but also includes extracting component chemicals from existing substances, and the unintentional or coincidental production of materials through secondary processes, such as the formation of new metal compounds during metals recovery from etching baths or other measures that result in chemical reactions forming new compounds.

Investigation and Reporting Procedures

Reporting is required for all non-exempt chemicals manufactured or imported by a company during the ten-year look-back period. The information to be reported is limited to the correct chemical name of the substance as listed on the TSCA Inventory, and the period of production or import, but companies must exercise sufficient diligence in identifying this information. The EPA has proposed that a company must use all information that is known or reasonably ascertainable, including all information that a reasonable person similarly situated might be expected to possess, control or know. This would include not only information in a company's own records, but also, apparently, information obtainable from a supplier. Indeed, where a supplier holds the information but won't share it (e.g., identity of proprietary reactants, or components of a mixture), the rules require a formal request for the information to the supplier through EPA's electronic reporting system.

Confidential Business Information Claims Must Be Substantiated

Another purpose of the reporting rule is to cull obsolete confidentiality claims for the specific identity of particular chemicals listed on the TSCA Inventory. Currently, each substance whose identity is claimed to be confidential is listed on a separate, confidential portion of the TSCA Inventory. The EPA has proposed to keep those identities confidential for all reported ("active") substances for which at least one company re-asserts a confidentiality claim. If no company asserts a confidentiality claim for the chemical, EPA would move its listing from the confidential portion of the Inventory to the public side. Companies claiming the identity of a substance as confidential will be required eventually to show that the identity is in fact confidential, and that disclosure would likely cause it competitive harm ("substantiation"). Substantiation of those claims can be deferred, but claims to keep other submitted information confidential (e.g., identity of the submitter) would have to be substantiated with the report.

"Reactivating" Inactive Substances

For companies that wish to start making or importing a substance that was not reported and has been designated "inactive" (and therefore is illegal to manufacture, import, process or use for non-exempt purposes), EPA has proposed a very simple notice process for "re-activating" the chemical. Inactive substances could be reactivated by notifying EPA through its electronic reporting system no more than 30 days prior to active commercial use. As proposed, the notice would require only the name of the submitter, specific identity of the chemical, the type of activity (import or domestic manufacture) and the actual commencement date for the new activity. Claims to maintain the confidentiality of the chemical identity would have to be substantiated within 30 days.

How to Prepare for the TSCA Inventory Reset

Once the TSCA Inventory reset rule becomes effective—expected by late June, 2017—companies will have a relatively short time to investigate ten years of past chemical activities and prepare and submit reports. Because the deadlines are fixed by statute, EPA has little ability to extend the reporting period. Companies should begin to assess now what it will require for them as a practical matter to comply, and begin to investigate and catalog materials to be reported. The process may be relatively simple for companies with only a few static operations, but firms that work with a more dynamic range of products, a diverse set of production and recovery operations, or import a significant volume of products manufactured by others may need to conduct a very significant investigation involving subject matter experts from various parts of the company. This may be complicated by past corporate ownership changes and changes in product lines and/or operating locations. Importers in particular may need to start early to obtain information on chemical identities for products from suppliers. All companies will need a system to manage the investigations of individual products (including documenting source information to meet recordkeeping requirements). Companies should also be aware of the chemical substances that are important to their business, but which they only process, and consider taking steps to assure that their suppliers will timely report these chemicals to EPA to keep them "active" and available, or determining to confirm this for themselves after the initial uprooting period, and submitting their own reports during the processor reporting period.

Companies need good investigations and complete reports, not only to assure that they do not inadvertently manufacture, import or sell "inactive" products in the future (each representing a potential violation with a fine of $37,500/day), but also because each overlooked chemical that should have been reported but was not (if any) represents a separate violation of the same potential magnitude.

Retrospective reviews of this nature also often lead to the discovery of unrelated past or ongoing regulatory violations of TSCA or other statutes—such as past failure to recognize and provide EPA with pre-manufacture notifications for new chemicals being made or imported, failure to provide and keep records for required TSCA import compliance certifications, or to maintain R&D or export-only exemptions, noncompliance with applicable significant use rules, failure to report chemicals subject to CDR reporting, inaccurate safety data sheets, non-compliance with required product disclosure labeling (e.g., Prop 65), or failure to report (or inaccurate reports) for substances subject to Toxic Release Inventory reporting. Companies would be advised to consider how compliance of issues will be addressed if they are encountered. Viewed more positively, some companies may seek to leverage the investigations that they are otherwise required to make and treat the obligation as an opportunity to conduct a compliance review and actively seek out any such issues so that they may be corrected. Coupling the required inquiry with a voluntary chemical compliance audit would give a company the opportunity—using EPA's audit policy—to promptly disclose and correct any violations discovered without incurring gravity-based penalties.